But government sources suggested last night the move may have also provided an insurance policy for Labor against by-elections caused by any possible resignations which could bring down the government.

With the election date set in stone, the government could legally argue for a delay for any by-election to coincide with the poll date, thwarting the potential fallout of an early resignation by Peter Slipper.Ms Gillard also issued a challenge to the federal Coalition that it could no longer hide behind the uncertainty of an election date to bury the true cost of its political policies.

But senior members of the government last night confirmed the move was also partially designed to head off any further challenge to her leadership from Kevin Rudd.

The man who Ms Gillard deposed would be labelled a "wrecker" if he brought on a spill now that the federal government was effectively in campaign mode.

Ms Gillard is believed to have made her decision last weekend - after floating the idea past Treasurer Wayne Swan over summer.

But she kept it a secret from her Cabinet, which met on Tuesday night and was given no hint of what was planned.

Leader of the House Anthony Albanese, Labor Party national secretary George Wright and a handful of trusted staff are believed to have been the only ones in the loop.

The independents and The Greens were also given advance warning but the Labor caucus had to wait to find out along with the rest of the country, leaving many in shock.

While Gillard loyalists backed the move, several senior members of the government reacted angrily, claiming it was a "tactical disaster" that could trigger another move against her leadership.

There has been no counting for Mr Rudd but one MP said there could be a chance of a leadership switch if Ms Gillard's boost in the last quarter of 2012 proved to be an "Indian summer" once voters were forced to make up their minds now that an election date had been announced.

Ms Gillard insisted her motives were to close down the divisive political debate set to dominate the start of the year and focus the country's attention on national policy issues.

"Announcing the election date now enables individuals and businesses, investors and consumers to plan their year," she said.

"I do so not to start the nation's longest election campaign, quite the opposite.

"It should be clear to all which are the days of governing and which are the days of campaigning. It's not right for Australians to be forced into a guessing game."

The majority of Labor MPs contacted by The Daily Telegraph feared the Prime Minister's move could backfire.

One Queensland MP said they were stunned the PM would make a political announcement during a national disaster.

Victorian Labor MP Michael Danby even announced he would not participate in the election day because it fell on the most sacred of Jewish holy days, Yom Kippur.

A senior minister said: "It is madness. I've got no problem with September but by announcing it now, everything we do now will be seen through a campaign prism, not of a government governing. As of today Labor MPs will not be going out as MPs but as candidates.

"It has given away every advantage of incumbency."

Another senior MP said the Prime Minister had effectively appointed herself to caretaker mode eight months early.

"Anyone who says it's not an eight-month campaign should resign their seat right now," the MP said.

"This has legitimised the Liberal candidates and de-legitimised our own."

Sources close to Ms Gillard denied the PM had handed Mr Abbott a tactical advantage by giving up the weapon of surprise. And they denied it was intended as a bulwark against another Rudd challenge.